MedinCell S.A. (MEDCL) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us on the new Special, therefore, MedinCell. Today, as you can imagine, we will discuss what we true U.S. approval means for MedinCell the market opportunity and the long-term financial impact for the company. And then we will take questions from analysts. Joining me today are Christophe Douat, our Chief Executive Officer. Hello, Christophe.

Hello, everyone. Hello, David. .

And Stephane Postic, our Chief Financial Officer. Before we start, I want to remind you that today's presentation and our comments include forward-looking statements involving risk, and uncertainties. Actual outcomes may differ materially. Please review the important notice on the Slide #2 of the presentation. And I remind you also that all information speaks only as of today. Christophe, that said, I leave you the floor.

Thank you, David. And welcome, everyone. Weltruza's approval is a decisive step shift to growth strategy. Our 3 engines are now progressing in parallel, used Welts and our partnered and internal pipeline, including our first program with AbbVie. Together, they illustrate the model we are building, multiple differentiated long-acting medicines supported by multiple partnerships and capable of generating recurring value over time. . Weltruza is transformational for MedinCell across 3 dimensions: innovation, the first and only once-monthly subcu olanzapine LAI for adults with schizophrenia. Financial impact, a second potential stream of recurring royalties alongside potential milestones. Platform validation, a second FDA approved product, demonstrating the repeatability of our technology and business model. Schizophrenia is a chronic, progressive and debilitating disorder and long-term adherence remains a major challenge. Mist doses can lead to treatment failure and relapse. By reducing the burden of daily dosing, long-acting injectables can support adherence and lower relapse risk. This is the patient need Walrus is designed to help address for appropriate patients treated with olanzapine. Today, long-acting injectables are the core of schizophrenia innovation. LAI penetration in schizophrenia is expected to increase from approximately 13% in 2025 to 18% beyond 2030. Within this growing market, around 300,000 U.S. patients are already treated with oral olanzapine. Olanzapine is a well-established treatment option, including in more complex patient populations, but LAI penetration has remained minimal because of the post-injection monitoring requirement associated with the previous option. Weltruza is the first olanzapine LAI approved in the U.S. without a post-injection monitoring requirement. This removes a major practical barrier to the use of long-acting olanzapine. It is administered subcu once monthly requires neither loading doses or oral supplementation at initiation and is available in 3 doses corresponding to commonly precised oral doses. In Teva's Phase III solar program, Weltruza demonstrated efficacy across symptoms, illness severity and personal and social functioning. Its systemic safety profile was consistent with oral olanzapine and no cases of PDSS were observed during clinical development. no cases of PDSS were observed during clinical development. Commercial adoption will depend launch execution, reimbursement, physician adoption and patient access. Uzedy and Weltruza are complementary mets based on different active ingredients and addressing different clinical needs, together cover the 2 most widely prescribed atypical antipsychotics in schizophrenia and have the potential to address roughly 75% of schizophrenia patients in the United States. As you can see on the slide, the contrast is clear. Long acting formulations are already well established for risperidone and paliperidone. On the left, while olanzapine remains widely used orally, but largely untapped in long-acting form. Weltruza removes a key barrier that historically limited olanzapine LAI adoption. Teva expects to be making Weltruza available in the United States in the coming weeks. Patient access will depend on market access processes and discussions with payers, which will take time. Teva brings deep expertise in U.S. schizophrenia market, an established commercial infrastructure and recent experience launching and growing used -- this provides a strong foundation for Weltruza, while outcomes will depend on execution, reimbursement, physician adoption and patient access. Stephane? I give you the floor for the financial framework.

Thank you, Christophe. So now with Uzedy and Weltruza, MedinCell has 2 approved products under the same economic terms assessed separately for each product. For each of the 2 products, MedinCell is eligible to mid- to high single-digit royalties on worldwide net sales. up to EUR 108 million of milestones remain for used and up to $112 million for Weltruza, including the $4 million milestone that we will get right at approval, which will be payable in the coming weeks. Commercial milestones depend on specified annual net sales thresholds. Royalties, as you know, are the principal driver of the long-term value. Teva currently estimate combined peak sales of up to $2 billion for the 2 products, used and Velcosa. This -- this is Teva publicly stated expectation for the franchise, not made in the guidance. At that level, Med in sales annual royalties could approach $150 million depending on the product sales and applicable rates. This is an illustration of what it can represent and definitely not a med in cell forecast. The U.S. patent portfolio covering Weltruza includes multiple granted patents extending to 2044, patents may be challenged, and this should not be interpreted as guaranteed exclusivity through that date, but intellectual property and now provide an important foundation for the long-term value creation. Back to you, Christophe, now. .

Thank you, Stephane. I would first like to thank Teva and all the teams who contributed to this approval. It reflects years of persistent scientific rigor and close collaboration between Teva and MedinCell. Let me close with 3 key outcomes. Weltruza addresses a major treatment gap and opens a significant opportunity in a large, established oral olanzapine population. It creates a second long-term royalty stream and expands MedinCell's recurring revenue base and growth potential. Last, with 2 FDA-approved products, MedinCell's platform is now established as a proven engine for differentiated long-acting medicines. One last thing I would like to say, Weltruza, is more than a second approval. It opens a new growth chapter for med in cell and contributes to a broader transformation driven by execution, growth, recurring revenues and a pending pipeline and world-class partnerships. We believe MedinCell is entering the most transformative years in its history. Thank you. We are now ready to take your questions.

Thank you, Christophe. Thank you, Stephane. So as you suggested, Christophe, we can start questions. And we'll start with Mike from Evercore. Mike.

And much congrats on the approval. I know this is a long time coming and well deserved. Three questions for me. I wanted to get your thoughts on would you expect the maximum conversion from oral olanzapine might be in? And how this may differ in the U.S. versus the EU? And I have 2 follow-ups.

The conversion rate at MedinCell, we think it could be higher than risperidone and paliperidone because of the higher need for compliance with the population that takes olanzapine. So the second point I would make is since there is no appropriate LAI of olanzapine on the market. It's a wide open road for Weltrosa, which should experience a faster ramp-up than the Uzedy.

Thank you, Christophe. Next question from Shan Hama from Jefferies.

I have two, please. So given that Europe is, of course, a wait for that decision at the moment, could you help us understand how significant the PDS sort of monitoring gains in Europe? And how that looks versus in the U.S.? Just to get an idea of the potential uptake in Europe if and when it gets approved. And then secondly, I guess, earlier on Tapas call, management noted that expansion into bipolar mania would require additional clinical studies. And then, of course, given that Weltruza's approval without monetary requirements has been achieved, how are you thinking about future label expansion opportunities for this asset? Or do you think this is a primarily severe schizophrenia asset?

When you look at the existing product, which has PDS, if you look at the existing patient population, I believe there is around 300 patients in the U.S. as we speak. That use -- the existing product from -- which used to be idle. So there is wide open space for Weltruza. In Europe, same situation, PDSS has really scared clinicians patients from using the existing LAI product. So we expect a very strong significant shift from oral olanzapine to the Walrus olanzapine long acting in the upcoming months and years, both in Europe, in the U.S. . So we can't disclose Teva's plans on indication expansion. But it's certainly, obviously, given the very significant potential of olanzapine LAI, something that Teva is looking at in the same manner as they looked at it for USD and expanded into the bipolar disorder indication.

You want to add something, Shan.

Sorry sir, thank you.

So next question is from Nicolas Pauillac of Kepler Cheuvreux.

And congrats on the big news. It brings like 2023 memories big Congress. Maybe 2 questions on my end. One is going to be predict. I was just maybe a clarification on what you said, Stephane, when you mentioned that the Teva's target, where are you employing sorry, that you think they are kind of too conservative? Or it's just to, let's say, repeat that you only get priorities on that. So this was just a quick clarification there. And then the second question, how should we think about this ambition of Pennsaid to reach the operational profitability, knowing that Teva intercolates pretty vocal in the fact that they were highlighting that we should expect a slow ramp-up into H1 '27, then probably an acceleration of the sales situation. So how should we think about that when we look at, let's say, medium side angle.

Hour the question, Nicolas. So on the first part, indeed, I emphasized on the fact that it is Teva's guidance that I was mentioning with this EUR 2 billion franchise for the 2 products. As you know, since you are following the medical for a long time, all of you -- we believe that there is indeed more room to play on the 2 programs. Uzedy is already is going to achieve almost EUR 300 million, maybe even EUR 300 million this year. So it means that it's on target to become blockbuster product by the beginning of the 2030s. . And we all know that the potential of Weltruza is even bigger than for us. So all in all, EUR 2 billion for the 2 products seems indeed a bit conservative. But at the moment, it is indeed the public guidance from Teva. So we are sticking to that guidance. But hopefully, we'll have some more good news to share in the coming years. Now on the operating profitability. I would say that definitely, the news of today is a good 1 because it triggers a milestone of $4 million. It also means that we are going to receive royalties from Teva on the Weltruza net sales on top of the USD ones. So it's -- things are definitely going in the right direction in terms of revenues. Does that mean that profitability is going to happen in '27? I'm not going to comment on that. And as we've said during different occasions, the -- as of today, we are clearly focusing on accelerating the growth on the rest of the pipeline. Christophe mentioned very briefly the third engine that we have with the first AbbVie program as the first program in the pipeline. So that's definitely something that we are looking carefully at and we are making to have all the resources rightly allocated.

Thank you, Stefan. Next question is from Damien Choplain from Stifel.